Canada has the minerals needed for EVs. How much bargaining power does that really give us?


There’s this emerging notion of Canada as an impending superpower in mining the critical minerals that will run defining technologies of this century, from electric vehicles to smartphones and solar panels.

It was a recurring theme of Prime Minister Justin Trudeau’s recent Washington visit.

It’s sometimes raised as a potential source of geopolitical power for Canada, say, against the United States in a trade spat

We’ve even heard one attention-grabbing suggestion from union leader Jerry Dias: that Canada should cut the U.S. off from these minerals if it won’t cave in a dispute over electric vehicles.

This conjures improbable images of Canada wielding some sort of modern-day version of Saudi Arabia’s notorious oil sword of the 1970s.

Okay, now it’s time for a reality check.

Much of Canada’s resource wealth lies in cold, hard-to-access areas. Here, a view of Apex, Nunavut, overlooking Frobisher Bay. (Nathan Denette/CP)

Basic statistics offer something of a cold shower: Canada’s position is not remotely comparable to the Arab oil powerhouses of 1973

In fact, global surveys suggest Canada holds a tiny percentage of mineable worldwide reserves of critical minerals and is not only way behind world-dominating China but lots of other countries too.

“We’ve been asleep for years and years and years and have chosen not to act,” said Eric Miller, a Canadian-born trade consultant based in Washington, D.C.

“And the Chinese have had a deliberate strategy for 25 years to consolidate ownership in all critical minerals.”

So now that the rest of planet Earth has woken up to the economic importance of several dozen industrial minerals like cobalt and lithium, here’s the outlook. 

The International Energy Agency predicts demand for critical minerals will double by 2040, or even quadruple if we get serious about meeting our Paris climate commitments.

Electric vehicle purchases are expected to grow tenfold this decade, stoking an insatiable appetite for lithium batteries and the cobalt that prevents them from melting.

Here’s the current math

The U.S. Geological Survey runs a detailed inventory each year and the 2021 version offers sobering context about our position.

For cobalt, Canada has three per cent of extractable reserves worldwide — one-seventh of what Australia has, behind Russia and the Philippines, and not even comparable to Congo which has over half the known supply, mostly owned by China.   

Canada’s not the only game in town. In fact, many countries have more known reserves of these minerals — like Argentina, and this lithium site in Salta, seen in August. (Agustin Marcarian/Reuters)

For lithium, Canada has 2.5 per cent of reserves worldwide, a microscopic share behind Australia, Chile, Argentina, and of course China.

It’s similar with nickel, and copper, manganese, graphite, and rare earths — where Canada has 0.7 per cent of known reserves, 53 times less than China.

For context: Canada’s single major customer, the U.S., needs way more of this stuff than we can provide, with 20 per cent of the global economy and 10 per cent of electric vehicle sales.


Now let’s talk potential

The Canadian government says the USGS reports don’t tell the whole story, because they define reserves as currently economically viable mining sites, failing to capture the vast potential lying in the ground.

To help tap that potential the latest federal budget spent $9.6 million to start a critical minerals office and $47.7 million for research on processing and refining.

The challenges for Canada are spelled out in a recent Commons committee study: remote, hard-to-reach sites, cold weather, environmental considerations, and necessary Indigenous-Crown consultations.

Prime Minister Justin Trudeau, speaking with U.S. Vice President Kamala Harris, talked up Canada’s mining potential during his trip last week to Washington. (Kevin Lamarque/Reuters)

Another challenge? Chinese state-backed entities have been buying Canadian-owned assets for years — and they haven’t stopped.

China is buying our assets. Ask Hunter Biden

The New York Times has reported that President Joe Biden’s son Hunter founded a company that helped China Molybdenum gain control in 2016 of a Congolese cobalt and copper mine owned by American and Canadian firms.

Just last month, China’s Zijin Mining Group Co. made a nearly $1 billion offer to buy Canada’s Neo Lithium Corp. Chinese battery-maker CATL also announced plans this fall to buy Canada’s Millennial Lithium Corp. 

These offers face new regulatory scrutiny. 

Canada this year slightly tightened the foreign-investment rules for critical minerals, other sensitive technology, and for purchases from state-backed entities.

People fetch water outside a copper and cobalt mine run in Kolwezi, Democratic Republic of Congo, 2015. China dominates the mining sector in this country and its vast reserves of minerals. (Aaron Ross/Reuters)

Some were rejected even before the rules change: federal officials shut down a Chinese offer for a goldmine in the Arctic and for a Toronto-based construction-and-mining giant

‘People have woken up’

A former federal cabinet minister says people are finally aware of the importance of critical minerals; he compared that to a decade ago when he ran Industry Canada and people spoke of them primarily for their role in fighter jets.

“People have woken up,” said Tony Clement, a onetime Conservative minister. “I think there’s an increased understanding of what’s at stake. … I don’t think the public wants to see [those Chinese takeovers] anymore.”

He says Canada needs better control over its supply chains and that might require public funding to get mining sites open.

So past isn’t necessarily prologue.

Trudeau spoke during his trip to Washington of the potential, and the need for North American trading partners to lean on each other — not fight each other.

“At a time when supply chains are disrupted around the world, when people are rethinking, ‘Where are we getting things from,’ … the U.S. could do worse than rely on its closest friend, its oldest friend, its most reliable friend,” Trudeau said during an event at Washington’s Wilson Center. 

Critical minerals won’t just help expand production of electric vehicles but all sorts of increasingly important technologies, like solar panels. (Dane Rhys/Reuters)

There are things happening in Canada.

Like, this month, a new road is scheduled to open in the Northwest Territories and it’s supposed to help access a cobalt-gold-bismuth-copper site discovered in 1996

It’s projected to reach a peak annual production of 2,000 tonnes of cobalt per year, which would single-handedly add more than one per cent to total global output.

In Quebec, a lithium site facing bankruptcy and plagued by cost overruns related to the complexity of mining in remote James Bay was just bought by foreign companies including Tesla supplier Livent. 

Quebec’s Nemaska Lithium now promises to open the largest lithium mine in North America with an annual production worth more than one per cent of the global total.

In Ontario, one case serves as a reminder that Canada’s mining assets aren’t limited to our own territory.

A company that hoped to mine cobalt in Canada has shifted strategy after coming up empty at home; First Cobalt is now changing its name and, after signing a deal with global mining giant Glencore, will refine various materials including cobalt mined in Congo.

Another source for optimism is that innovation is hard to predict. Take cobalt-free batteries: efforts are well underway to develop them.

Could this sector eventually, someday, be a source of leverage for Canada in international disputes? That’s been suggested during the current one with the U.S. over electric cars and President Joe Biden’s buy-American policies. (Jonathan Ernst/Reuters)

Still, there’s skepticism that the world, let alone Canada, should expend much effort trying to usurp China’s dominance here.

Former White House official: Do we even need this?

Those skeptics include someone who was director for China policy at the White House National Security Council under Donald Trump.

Matt Turpin says he’s been part of studies on this issue several times over the years and the ultimate conclusion was: Let China do this.

He said these metals aren’t actually that rare, are dirty and expensive to process, and if China wants to subsidize it all and sell minerals to the world for cheap, so be it. 

“It’s always kind of hard to understand how we would create — and why we would create — alternative, more expensive, dirty production processes if Beijing is going to produce it,” Turpin said in a recent CBC interview.

What about the national-security argument?

Isn’t the whole point to diversify from China and make us less reliant on Beijing? Especially at a time of rising tensions. After all, look at the troubling example of what China did to Japan in 2010: it cut off exports of these minerals.  

Just two years ago China’s President Xi Jinping made a not-too-subtle threat by visiting a rare-earths production hub at the height of a trade dispute with the U.S.

Turpin isn’t too stressed about that either. 

He doubts China would engage in a long-term standoff over these minerals because, he said, other countries have leverage too.

It’s called food.

China has a massive trade deficit with the rest of the world in food and it needs imports from multiple trading partners to feed itself.

“China can’t produce the food it needs. It needs to import it. So their dependency is very different than our dependency on rare earths,” Turpin said.  

“We could produce rare earths. We choose not to. … They can’t produce the food they need.”

It just so happens that Canada is a powerhouse in potash, used in agriculture, unlike its position with lithium and cobalt.

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Dominance wasn’t built in a day

Turpin said it might make sense, at most, for U.S. allies to build a strategic stockpile to draw from if China ever temporarily suspended supply.

Yet diversifying and expanding supplies will be a global priority for the foreseeable future. It’ll just take a while, Miller says. 

“Chinese dominance has been built piece by piece, over time. And that’s been our choice to not actually choose to push back,” he said.

“It took the Chinese a generation to achieve dominance over critical minerals. And it’s going to take probably two generations for the West to rebalance the equation.”





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